Few Snags Expected for Verizon Wireless, Alltel

Verizon Wireless said on Thursday it would buy rural mobile phone service provider Alltel Corp for $28.1 billion, including debt. The bid is not expected to hit major regulatory snags even though the merged entity would create the nation's largest cellphone company. Before the deal is finalized, it will face scrutiny from the Justice Department and the Federal Communications Commission. The DOJ will examine whether the deal would violate antitrust rules, and the FCC will then determine whether the merger would harm the public good. "We don't see significant problems with this deal getting through DOJ and the FCC," said Paul Gallant, an analyst with Stanford Group. Gallant said areas where both companies have overlapping wireless airwaves can be remedied city by city if the merged company gives up some space. The FCC and DOJ both are expected to examine areas of dual coverage. Verizon is expected to argue that the two companies' networks are complementary, with little serious overlap. Alltel has customers in 34 states, and its network is strongest in the Southeast and central parts of the country. Verizon's network is national, but it is strongest in the Northeast and on the West Coast. Any city-by-city analysis of network overlap will take time, which could place the pending merger in the middle of an administration change and a new Congress. "It is troubling to watch the dominant providers of DSL, AT&T and Verizon, gain complete control of the wireless market by buying up all their competitors, " said Ben Scott, policy director of Free Press, an advocacy group. Scott said the expansion of wireless Internet could be squelched if the dominant companies in the wireless market also control the cable market, another broadband Internet avenue. Gigi Sohn, president of Public Knowledge criticized the merger, saying it will concentrate the wireless market. "If the deal goes through, two companies, Verizon and AT&T, will control about 150 million of the 260 million wireless customers in the U.S. Verizon will have about 80 million alone," Sohn said.
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